The Good and the Bad of Fort Wayne Short Sales
Fort Wayne short sales are when lenders allow sellers to sell for less than what is owed. For lenders taking a loss on the sale is far better than having to deal with a foreclosure and its process. When the housing market collapsed a few years ago, Fort Wayne short sales became a highly popular real estate investment niche. Now that the housing market is on the rise these deals are becoming harder to find; but there are still good deals out there if you know how to go about them. Are Fort Wayne short sales the right avenue of real estate investing for you to follow?
Here are just some of the pros and cons of Fort Wayne short sales.
The Good
The Discounts Can Be Big
One of the biggest reasons that many pursue Fort Wayne short sale investments is that there is huge potential for discounts. When the short sales were at their highest point many properties were going for 60 cents on the dollar; now that the market has recovered the discounts aren’t quite so drastic but there are still out there to be had. Keep in mind that the Fort Wayne properties with the most issues are more likely to offer the biggest discounts, so look for the properties that will be easiest to convince the lender has issues.
You Could be Helping Someone
For many Fort Wayne sellers a short sale is one of their last options to avoid going into foreclosure that will stay on their credit report for the next four to seven years. This will impact their ability to buy a car, rent a home, or apply for a credit card. Doing a short sale with them will still impact their credit score but nowhere near the way a foreclosure would. So you’ll not only be increasing your potential for making a profit but you’ll be helping out the homeowner.
Easy to Negotiate
Many investors will tell you that working with lenders is often seen as a negative thing when it comes to short sales. In fact, you actually have more pull with lenders when it comes to Fort Wayne short sales, and can influence their decisions. If you are able to supply them with an accurate cost of repairs, comparable sales and other negative items there’s a chance they will see the value your way.
The Bad
They Can Be Time Consuming
One of the biggest reasons that Fort Wayne short sales stopped being so popular was the length of time that each transaction took; many took 90 days or more to close. Many of these deals sat idle for many weeks on end tying up funds and restricting investors from looking for other deals. If the deals would have ended up closing this wouldn’t have been much of a problem, but many deals would have issues at the last minute that prevented them from moving forward.
Nothing is Certain
In order to close a short sale everyone will need to be on the same page. This is probably the biggest challenge for you as an investor. Not only does the seller need to want to buy, the lender needs to agree to the offer. Since the lender will need to do their own valuation of the property, this means that they could accept your offer, counter or outright deny your offer. Nothing is certain.
The Paperwork
In order to get approved for a short sale the lender will underwrite the application in a reverse process. Instead of looking for the income and assets that the homeowner has to pay the mortgage they are they looking for the reasons that they won’t be able to. They will need to have documentation of hardships that prevented payments including bank statements, W2’s, and current paystubs.
When you make your offer you will need to include your supporting documentation, a list of repair costs, property damage, and comparable listings to support your valuation of the property. Be prepared because there will be dozens of paperwork that must be submitted before the lender will even begin to move; if one piece of paper is not present the process will not start. Beware because if they have to ask for any additional documents your offer will go to the bottom of the pile that will add several weeks to the process.
Whether you decide to go the route of Fort Wayne short sales in your real estate investments or not is up to you. The important thing is that, like with any deal, you are willing to do the research in order to make an informed decision on whether this is the right move for you. If you make the right moves a short sale could be a great boost for your career.